Summary
Chesapeake Energy Corporation (the "Company") announced on October 12, 2017, the issuance of $850 million in aggregate principal amount of senior notes through a private placement. This issuance comprises $300 million of 8.00% Senior Notes due 2025 and $550 million of 8.00% Senior Notes due 2027. These new notes are an additional issuance of previously outstanding notes and were offered under Rule 144A and Regulation S. The primary impact for investors is the significant increase in the Company's debt. The issuance of these notes, carrying a fixed interest rate of 8.00%, will increase the Company's annual interest expense. Investors should note the terms of the Registration Rights Agreements, which obligate the Company to file exchange offer registration statements by specific dates (June 13, 2018, for 2025 Notes and November 28, 2018, for 2027 Notes) or face potential additional interest payments. The successful completion of this private placement also satisfied a financing condition related to the Company's ongoing cash tender offers.
Key Highlights
- 1Chesapeake Energy issued $300 million in 8.00% Senior Notes due 2025 and $550 million in 8.00% Senior Notes due 2027.
- 2The total aggregate principal amount of new debt issued is $850 million.
- 3The notes were issued through a private placement under Rule 144A and Regulation S.
- 4These are additional issuances of previously outstanding senior notes.
- 5Registration Rights Agreements are in place, requiring the Company to file exchange offer registration statements by mid-2018 for the 2025 notes and late 2018 for the 2027 notes.
- 6Failure to meet registration deadlines could result in additional interest payments to noteholders.
- 7The financing condition for the Company's cash tender offers was satisfied by this issuance.